Millions to get CPP compensation, but millions may miss out

More than seven million people are in line to share a £1.3 billion
compensation pot after Britain's biggest banks yesterday agreed to foot the
bill for years of mis-selling credit card insurance cover.

But millions more could miss out as regulators admitted the redress scheme linked to the CPP company at the centre of the scandal will not include customers who bought - and cancelled - their policy before 2005.

Anyone who cancelled their policy before that time, when the regulator took responsibility for the market, will have to apply directly to CPP or their bank or credit card company.

Those who bought or renewed a policy after 2005 will be written to directly.

One industry source said: "If you're post 05 it seems like a sensible system, but you're pre 05 it could be a painstaking operation.

"If a bank rejects your claim, you're left with the Ombudsman, and they are under all sorts of pressure tackling PPI as it is."

The Financial Conduct Regulator yesterday revealed that 13 banks and building societies such as Barclays and Bank of Scotland will take part in the compensation scheme.

The banks referred customers applying for cards to CPP, which sold card protection and ID fraud cover judged useless by the City regulator last year. The FCA last year revealed that lenders pocketed commission of up to 60 per cent from CPP for every tip that turned into a sale.

CPP itself has made a provision for compensation of £29 million. Revealing half-year results and a loss of £15.8 million yesterday CPP chief executive Paul Stobart admitted the company would be better off if only a small number customers eligible for redress filed a claim.

A £13 million bank facility has to be renegotiated if more than 25 per cent do so. Asked what would happen if everyone was successful, Mr Stobart said: "It would crush us."

CPP founder Hamish Ogston, who left the company earlier this year, slammed the FCA for "sensationalism" by quoting the £1.3 billion figure. He said: "It's b******s. There's never been a compensation redress scheme in history where it's been 100 per cent."

Analysts claim Barclays could face a compensation bill for as much as £300 million. Barclays was one of the few to make a statement yesterday, but refused to disclose a potential figure.

Paul Maddox, Barclays managing director for customer service, said: "Barclays has voluntarily stepped in along with other banks to fund this scheme. Without this vital support, CPP would not be able to meet its financial obligations which would not be in the interest of our customers."

He added: "We are determined to put things right for Barclays customers who are eligible for redress payments as swiftly as possible through this new scheme."

As well as Barclays, Bank of Scotland, Canada Square Operations (formerly Egg Banking), Capital One Europe, Clydesdale, Home Retail Group Insuirance, HSBC Bank, MBNA, Morgan Stanley Bank, Nationwide Building Society, Santander, Royal Bank of Scotland and Tesco Personal Finance will pay out compensation.

Smaller providers that worked with CPP, thought to include Bank of Ireland and BBVA, would have to be contacted directly.

Customers due compensation will get their policy costs back and interest of 8 per cent, except in cases where claims were made against the cover. The average payout is expected to be £170.

Guy Anker at Moneysavingexpert said: "The scheme could help millions get their money back as the mis-selling was so outrageous and on such a massive scale.

"Any CPP customer who gets one of these letters should vote for the redress package."